Every year the GAO goes through this exercise and observes that “the federal government is unable to determine the full extent to which improper payments occur (estimated by the GAO at $124.7 billion, a 4.5% error rate, in 2014) and reasonably assure that appropriate actions are taken to reduce them.” The GAO calls this a “material weakness in internal control.””, The Wall Street Journal Editorial Board, March 2015

Review & Outlook

Government Love . . .

. . . means never having to say you’re sorry you misplaced $125 billion.

Photo: Corbis

The Obama Administration often claims to be a careful steward of taxpayer dollars, and today’s punch-line is the collective $124.7 billion program called “improper payments.” That’s the Washington circumlocution for money that flows to someone who is not eligible, or to the right beneficiary in the wrong amount, or vanishes to fraud or federal accounting incompetence.

The Government Accountability Office reported the new 2014 figure last week, which is a $19 billion or 17.9% year-over-year increase. The overall error rate ticked up to 4.5% of outlays from 4% in 2013. Improper payments are spread across 124 programs among 22 agencies, but some 65% are concentrated in three areas.

One is the earned-income tax credit, the transfer program meant for the working poor with its error rate of 27.2%. That means nearly three of 10 dollars were in some way undeserved—and the Treasury Inspector General thinks the real share is closer to four or even five of 10. The GAO says the causes are “inability to authenticate requirements, improper income reporting, and inability to verify income before processing returns.” Is that all?

Naturally, the White House has proposed a major expansion of this credit, and there’s bipartisan support in Congress.

The other two big culprits are traditional Medicare and Medicaid fee-for-service reimbursements. Compared to the earned-income credit, these are roaring successes with respective error rates of 12.7% and 11.6%. Then again, for a program as large as Medicare the error rate translates into $45.8 billion of annual waste, fraud or abuse.

Every year the GAO goes through this exercise and observes that “the federal government is unable to determine the full extent to which improper payments occur and reasonably assure that appropriate actions are taken to reduce them.” The GAO calls this a “material weakness in internal control.” Another term is a scandal.

The White House budget office estimates improper payments differently than GAO and claims overall error rates have steadily improved since spiking to 5.42% in 2009 from 2.81% in 2007 amid the hurly burly of the stimulus. Still, we are instructed to accept—and even expand—a tax credit that allots 27% of its dollars illegitimately as well as a government capable of losing an extra $19 billion in a single year. For a sense of the scale, Apple posted earnings of $18.04 billion in the first quarter of this year, which set the highest profits record of any company in history.

Results rarely matter for government work; what counts is not how well dollars are spent but how many. At some point, though, year after year, you’d think liberals who love government would realize that the public would have more confidence in their agenda if the government was better run.

Posted on March 25, 2015, in Postings. Bookmark the permalink. Leave a comment.

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